tv Squawk on the Street CNBC October 19, 2015 9:00am-11:01am EDT
and it just melts your heart. >> thank you all for joining us today. talking about this and so many other issues. it's been a pleasure to have all three of you here today. >> it's nice to be here. >> can i write it down, does it hold -- >> absolutely. no problem. >> that does it for us. right now time for "squawk on the street." good monday morning. welcome to "squawk on the street." i'm carl quintanilla with scrim cramer. a fifth of the earning, half a dozen fed speakers, frpre-marke is lower and a miss on morgan stanley's numbers. we'll get to that. oil is below 47 today.
our road map begins with with jack lew speaking out about trouble in china. >> shares in morgan stanley sinking on its earnings. is there more pain to come. >> and first up, the major indices coming off three straight week of gains. s&p up almost 6% since the beginning of the honesmonth. china's slowest growth since 2009. still above consensus. and then jack lew addressed chinese currency valuations earlier this morning on "squawk box." >> i think you have to make sure that china understands that it's very important that they keep their commitment to let the rnb go up as well as down and the snapshot today is not the test. >> lew also talked about the debt limit, warned us about some accidents coming on that perhaps. and then on the china data, we
also got industrial production six month low, retail sales maybe a little bit better than expected. >> i continue to think that domestically china is a little bit better. there was a lot of good commentary on the honeywell call on friday. an otherwise just not as great call because there are divisions that weren't that good, but honeywell spoke positively about china. so it's a mixed playbook there. and i don't think mixed means you can go buy the minerals. i don't think mixed means that you should feel comfortable with caterpillar, but china has pluses and minuses versus when just six months ago it only had minuses. >> you've changed your tune a bit. >> well, yes. >> and you did so on europe and you were right when did you so there. >> thank you. >> so i'm paying attention. but i'm wondering what it is that you're seeing in china. it's been such a mixed bag. we've talked about that a lot p we see a yum and then other hand we see mall sales up sharply. you can go back and forth here. >> i think some of it is the communist party has relented.
the liquor sales of the high end liquor turned up in the numbers. so when you think some of this might have been the crackdown conspicuous consumption seems to be running its course. i think a lot of it is that. and then also the cutting of the tax in half for small engines really did spur a lot of buying. so i think there was pent up demand and there was also shame demand. now steve wynn talked about the notice of corruption in china. but if you are starting to sell a bit more, maybe what happened is the communist party has lessened the reins on the idea that you are out there showing your wealth. and that has been a big problem. you went into your foxhole about spending but now they're coming out. >> nike was the best dow stock
last week. up almost 5%. >> and for them that's tiffany. >> at the same time, the stabilization play in china has been going on for a while now in the marketplace. >> it was so visible that china was falling apart. whether correctly or not, the exchange was a thermometer and a lot of people felt it was going to be at the 3,000 level and it hasn't. we've seen so many articles about them selling treasuries and of course the treasury market is very firm. they can sell all they want. so they obviously had enough fire power to prop the market. >> xi did say the slowdown is a normal adjustment arm from an economy that does rely strictly on housing and infrastructure. >> i think that's right. i think the crackdown on conspicuous consumption at the same time is that switch has hurt them. i want to see what diageo says.
i no this will sound a little somber, but if you know johnny black and blue are doing well there, then you know that that means they're back. because that is also a sign like jordan's. remember they don't think -- you know how robert frank does the things about the 685 billion dollar home. they have apartments there. and it's not like a fifth avenue apartment. >> they're smaller in size. >> small apartments. but robert frank, they might do like the $32,000 home. be like the robert frank of china. >> middle class there is different than middle class here. >> but you could have that johnny walker blue versus the johnny walker red which i have -- at one time before, i did confuse it with paint thinner, but the diageo people -- not fair. >> have you ever had any three wise men? johnny, jack and jim in one shot glass. we'll do it after the show.
>> that's mo, larry and curly. >> yeah. >> morgan stanley did miss, profits down 42% in the period. trading down 17. gorman says it impacted morgan effexored income and asia merchant banking businesses. although ib town 12, wealth management up six. he with talk about the transition, but still highly linked to trade. >> my charitable trust owns it. >> she traded very well. >> but my friends on the call are saying please bring back ruth. please. i was looking for some relief. sometimes when my trust owns something -- >> you're not blaming it on the new cfo. >> no. if it's a bad story, you can't make it a good sorry. if you're the cubs, you're like, wou, i won a game or lrngs we did this great punt and somehow
the patriots figured it out but it was. >> g. idea. they shouldn't have hiked it and they hiked it and the problem here, the line by james gorman, we'll address areas of underperformance. areas. the only area that he said was okay was area 51. >> which we're still looking for. return on equity 5.6% of course. that was not strong. this follows goldman's report of last week which was not a particular good one. >> that was bad, but this is bad bad bad. >> this is worse? >> yes. >> can i say bad bad pbad is worse? >> we thought it was so great that they moved their model away from the justice department, but this is what is left. in the fourth quarter, ala the seahawks. against cam newton. >> you never know, but given mr. gorman back to his time at
mckenzie, comments to mary thompson from the cfo, we will focus on what we can control in fixed income currencies, commodity, balance sheet, capital expenses and head count. head count. >> my charitable trust just sitting there astonished. i was telling my portfolio manager, listen, don't forget goldman which looked really bad. conference call didn't embolden me do anything and yet the stock went up eight points from its low. so i think anything is possible in this market. this one, the book value they put out seems cheap, but cheap doesn't make it in a world where skrchlt jp are mo pchlpmorgan was subst better. >> we looked like we were going to breach 10% for a while. >> and there it is, this is the one, this is the industry. i expected better. i expected better.
let's move on to another stock that will be moving this morning, valiant shares volable in the pre-market. reported better than expected quarterly profits. ceo says outside pressures are creating a new pricing environment and that valeant keeps to 10% or less next year. they put out a fairly long slide presentation out talking about their reflections on their strategy and saying a number of important things in terms of their mission and what they see and what they speexpect will han in part talking about they won't take as much price out. they are actually going to start to spend more in r&d is what i read here. they say internal r&d will become more of a focus. >> they say their stock price
remains at current level. sharing purchases will be considered. this company runs at a good amount of leverage. it has taken a lot of price increase and it does continue to rack up acquisitions of course as part of key part of its strategy with its incredibly low tax rate. it's not just inverted, but it pays some enormously low tax rate. that is the valiaeant story und mike pearson. but stock getting punished because of the concerns that they will not be able to take price and always wonder whether they will be able to continue successfully the role of strategy. >> and if you're a lawyer and you got that subpoena, remember they got subpoenaed on pricing -- >> both massachusetts and new york. >> and what i think you would say is listen, we were making a focus here, we're not going to do what we were doing. the problem is that there was a considerable cohort of people
that they still list as if it's a retailer same store sale numbers which are considerably better than walmart's. again in comparison. >> and we're talking a couple cents a share. we'll see. the stock was up, then down. they put this out, i think they got the call going. so let's see where things end up. but we keep a close eye on it because as jim said, well owned by hung fu hedge funds. a large company and one that figured and followed its own path. you talk to mike pearson, there is no doubt he's different. >> but the different about him was slash and burn. he was like the general sherman of drug companies. now he's like with malice toward -- >> now we're spend more on r&d and not raise prices much. >> i don't want lincoln from him, i want sherman. but he's giving a little
lincoln. >> when we come back, the ipo market has the need for speed. ferrari jumping into the waters despite a number of companies postponing their public debuts. we'll talk about a big deal this week. the earnings this week, mcdonald's, boeing, coke, am e,- you name it. proud of you, son. ge! a manufacturer. well that's why i dug this out for you. it's your grandpappy's hammer and he would have wanted you to have it. it meant a lot to him... yes, ge makes powerful machines. but i'll be writing the code that will allow those machines to share information with each other.
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ferreira expected to price at a range of 48 to 52. 9 offering expected to raise about $5 million which will use the proceeds to pay down debt. match group has also filed for an ipo. and the number of ipos withdrawn or postponed, up to 67 last week. more than in any full year since 2012. >> i was thinking you could relate that to etf. e tch
etf don't buy ipos. and i think that's part of the problem. i think also there seems to be a lag of cash in general on the sidelines that i thought would be coming in. the demand to treasuries remains insane. they don't have an appetite for new. >> ferrari and the parlance of those who do these deals, the book looks good. they do expect that to be a pretty strong offering. we will see. but as we know, last week not the so good. alberts albertson's, we'll see when that comes. that's gone for a while. >> people immediately did the collateral damage of walmart to kroger, which then made you feel like that you were overpaying for albertson's. but i think the race has sex to it, has a sex appeal thing. otherwise the autos have not been good stocks at all.
>> for a while we've talked about staying domestic focused. is this a domestic story? that will be one of the topics of discussion here, whether it's too leveraged to asia or emerging markets in general. >> when you listen to these conference calls, the emerging markets are so, so are horrible. there was a really good article today about if you're robbed in venezuela, they don't want to take -- companies want to get out of it, as well. you have numbers coming out of brazil for thumb compani number and it takes your breath away. so you want everything to be domestic if possible and auto is really fantastic. mexican auto not that good was in an article. >> why don't we toss to phil. >> i think phil does have some news regarding something in the world of transportation. morning, phil. >> good morning. it is not regarding ferrari, it is regarding united airlines. remember last week the ceo had a
heart at tab and at the time all united would say was that he was hospitalized on thursday and now the question has become for the board what happens with the leadership day to day leadership at united airlines. just a few minutes ago, henry meyer issued a statement saying the company anticipates it will today conclude the corporate governor nance process necessitated by the hospitalization of president and ceo oscar munoz. the company expected to release more details either later today or tomorrow. in the meantime, united family's thoughts and well wishes are with oscar. and guys, we can't overstate the importance of what is going on at united from this standpoint. without clarity about who will be running the company on a day to day basis, it leaves a lot of investors wondering what exactly is going on at united. not that planes aren't taking off and day to day operations aren't continuing, but there brings up the question of the fiduciary responsibility of the board to let investors know who
is running this company. remember, they have earnings coming out on thursday morning. guys, i think we'll get more details certainly according to the statement later today or certainly by tomorrow at the latest regarding oscar munoz and his day to day governance at united. back to you. >> phil, thank you very much. the lack of clarity on this one is tough because the reports have been could back to work in two weeks, could be looking at interim ceos. >> obviously we hope everything is good. at csx, he was remarkable. trains ran on time. and that's what you need. >> when he took over, he was outspoken in his criticism, if you will, of the company. and so clearly was going to be somebody who forced a lot of change. but the lack of transparency here could be somewhat troubling. and you know you're dealing with health issues, dealing with a family that i don't even -- obviously phil has been doing the primary reporting, but may
not want to release that much information. but you've got a large investors base, you've just gotten rid of your ceo a month ago. >> 38 days on the job and he's in the hospital. >> i don't want to conflate his health with what he's strong at, but the operating ratio for railroad so important, how much money really closed the bottom line. he is such a great pick. i wish him well. hope he's back. because he could really -- the problem with unite the cd conti had been the planes ran on time and the trains ran on time for csx. >> we'll get cramer's mad dash and count dodown to opening bel. and we'll talk about oprah and her stake in weight watchers and important to watch monday night football tonight if you own shares of disney. back in a minute. (cole) alright, now that we have merged with cableworld,
we are so excited to hear your big ideas on how we're going to take on directv. so over to you. (newhart) thank you. full disclosure. we forgot to come up with ideas. (cw exec) yeah, we got messed up last night. you're lucky we're even here. (newhart) but, we did bring breakfast. (jmh) bagels? (newhart) nope. (woman) oh my goodness. (newhart) peel and eat shrimp. (cole) not how i would have gone but it's good, it's innovative. and that's what we want here. (vo) get rid of cable and switch to directv. call 1-800-directv. sometimes they just drop in. always obvious.
it's that time for a mad dash. a little company with about a $630 billion market value. >> apple. best large cap pick. by the way, the saturation bombing on this steve jobs movie is pretty amazing. i see the ads everywhere. but this stock has been stuck in a rut. and a lot of analysts have bulled it. they say good things and they can't get out of its way. and i think that's worrisome because it's becoming a large
source of funds. i continue to say own it, it's very inexpensive, but understand that it seems like people sell is this one in order to raise cash for other opportunities. and i'm not so certain that that isn't going to continue throughout until the end of the fourth quarter when maybe people come in at the end. but it seems like it just can't get out of its own way. >> still better than the s&p, but converging. >> yes. it's not what i expected. i think it's a good stock to own. and then i'm a big believe their we'll see consolidation in this national organic foods base. and there is a lot of chatter about the fresh market and whether they can do an lbl. they have a fantastic balance sheet. i've been saying since new guys came in that it's worth watching, but when whole foods reports, these companies don't have debt.
and now they have become value stocks. and this is the pre-know value. >> what is the chatter on this, is it a management? those are problematic for the boards in question. you got to get a special committee of course of the board. a lot of focus on them not letting the ceo obviously have an edge. so they're difficult to pull off in the current environment. >> you're right. the deutsche note says it could happen in the low 30s it would be a stretch. it's not expensive. numbers are not that good. so you're playing with fire. it's like up five, down three, which still makes it a better reward than risk. but my problem is the sector itself is under a lot of pressure, walmart wants to sell things lower. you can understand that. everybody in the supermarket business is trembling, trembling, about what is going to happen at walmart. what they're going to do. are they going to amazon everybody, including amazon. >> all right.
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you're watching "squawk on the street" live from the financial capital of the world. we'll get the opening bell this about 60 seconds on this monday, october 19. if that rings any bells, this date in '87, 22.6%. >> remarkable day. the week before had been the worst. and came in and there had been chatter about the deutsche mark and next thing you know, a lot of people doing portfolio insurance. in today most stock's stock you you couldn't get any brokers on the phone for the nasdaq. very frightening moment. >> certainly a lot of us have never seen anything quite like that. >> just a kera scary day.
i was on the desk. >> let's get the opening bell here. a look at the s&p at the bottom of your screen, it will be a busy week. a lot of big large cap names and dow components. at the big board, pjt partner, independent financial advisory firm cell brailebrating its spi. and also a-lifecycle management company. >> and of course paul is pjt partners. that was that spinoff advisory business from blackstone october 1. we're hoping one day soon to sit down with paul. interesting to run an advisory firm. they do a lot of distress, as well, so they can weather both sides. but they were an adviser to cablevision most investigationally for example. >> i was going over this
terrific dave coate call. you mentioned distress. they do a lot of business in oil and gas. dave is incredibly candid. he brought up the notion a lot of people worried about a recession. and i think about did it stress, about how much debt is out there and it would be a terrible time for recession. just kind of took me breath away because he just put it right out there. doesn't think there will be one. but he was trying to compare 2008, a lot of people bringing up 2008 compared to now. and i think it doesn't hold true. but the fact is that on the conference call it came up. and that is in the parlance. >> psych logically it is important introducing the idea can -- >> with the idea that many executives didn't see the downturn coming at the first half of 2008. >> hard to believe. >> it was just interesting to
hear in light of what we thought was a pretty good u.s. economy, that there is chatter that people are concerned. because there has been such a slowdown. particularly in nonresidential construction. certainly in latin america. but just be aware. and i think people want to see china come back. hasn't yet. europe is a little bit better. >> it's not often you get a 75% gain on an investor taking a stake, but that's what is happening to weight watchers as oprah winfrey take as 10% stake. about a $45 million investment. joining the pord board of direc saying she will even sign up. stock languishing awfully close to the low, but hal take it back to 12.20. >> the short case on weight watchers was the new bottle which is the fit bit model. and the under armour connect fit bit model. and they go against themselves and others. this is thought to be a weight
model and not a fitness model. but the oprah effect is big. she's spaying market price. so it's a game changer, but it's been heavily shorted. obviously it's not over. >> right. wow. although to be fair, this company was seven or eight times the size market cap wise, not even that long ago. >> it's been just terrible for them. and frankly it's because of the new model of the way people focus on their mind, body and health. numbers at fit bit are incredible. the hundred million more plus under armour people doing expected. so again, this is against the grain so to speak. >> has oprah told us anything, has she said anything at all publicly on this why she took the stake? >> if i'm not mistaken, she -- no? i guess not.
i know she made shaome appearans recently on cbs this morning oig. but i guess it didn't come up. and credit squeeze adds mcdonald's to its focus list. top investment ideas. they say that not only is europe turning as most people have already suspected, but the u.s. is starting to turn and that breakfast all day will be fully built into 4 q. they see 5% to 6% up side. >> i agree. i think heeaster brooke has won over many. he recognized sim poliplicitysi. he's not afraid to change things. people understand europe is not necessarily where you think of mcdonald's. when you go to the george sank, there's a mcdonald's not that -- >> i do know that that's in paris. >> yeah, there is a mctdonald's
about a block of a from there. and he turned around that mcdonald's and some others. and it's like the one in vienna, the one right near the hotel -- >> no. >> i get your point. i think france is the second biggest market. >> yeah, travels with jim if europe clearly involve a lot of mcdonald's and very nice hotels. >> just have to make a little stop. sfwr stay at the nice hotel and then eat mcdonald's in paris? i hope not. >> well, david, sometimes you have a big night out, it's good to hit a place. i had a big night out saturday, i'm telling you. i made a comeback. >> you you tweeted a picture of yourself and was it '70s? >> it was '80s.of the greatest ever. remember freak out? they played. >> that's kind of what you looked like in the '80s. >> i had a huge fro.
i didn't wear the sunglasses, but i had similar gcharb. why don't we all wear this stuff? >> we should go back to mar began stanley this morning. of course we mentioned at the top of the broadcast the company reported earnings that were not what investors hoped for. james gorman saying they expect positive trends in equities to continue. fixed income commodities was hurt. he said by a tough environment for our business mix, just quoting here, wealth management hurt by lack of new issuance, fic remain as focus. he also said retail investors due to step back due to volatility. bad day for morgan stanley, down over 6% right now. s >> stunning. because people like the simple model. the lack of legal fees. suddenly that outside counsel
number jpmorgan coming down, citi coming down, people so happy that they're passing the justice department oversight. >> year over year increase in $250 million in litigation reserves. so they gave you -- >> double whammy. >> related to an antitrust litigation matter. >> well, sometimes you -- i was surprised. i know goldman when i went over that call -- i took that call home this weekend, i said what am i missing that was so good and i think that it was that the stock got really cheap and some of these then moved up and maybe people think morgan is back to where it was. when you want cheap, you have to go th these tech companies. >> valiaeant down over 7% now. perhaps somewhat unexpected. spending a lot of time on the call answering questions about large price increases, and also the possibility of a spin of one of their businesses in the
future. you know, they give and you lot of detail, but they are being asked about pricing. they gave a hot lot of specific about volume versus price increases. >> down 100 bucks from its high. >> yeah. >> hedge funds were really con agr con gra great in that name. >> weight watchers making the oprah investment if i recall. hasbro beats by six cents. revenue this is line. boys revenue up 24 as star wars and jurassic world having their effect. girls down 28. >> it's interesting that there is a switch here. hasbro into mattel. mattel a lot of interesting technology. i spent a lot of time with the
mattel group when i was in the sales force and i think people are making that switch. you got the big yield in mattel. >> hasbro stole the "frozen" franchise from in mattell, but did disney has not announced a release date for the new film. they will launch star wars tickets tonight. >> he will not be able to see that commercial because i will be at the game. >> yes, amazing. we should point out it is allege interesting, hasbro of course over a billion dollars larger market cap wise than mattel, which had decidedly larger -- was decidedly larger company for many, many years until the last couple of years when its performances declined dramatically, that being mattel in stock market search and hasbro has succeed. so jim, what you're talking about would be reversal of a recent trend. it was a long time ago, but mattel of course once tried to buy hasbro.
>> hasbro has been a much better company. i think people at big mutual funds say one lagged the other. and on the morgan, one thing we left out is appro po of the ipos, people are sitting on their hands. so understand that retail investor trying to figure out what to do, the mutual funds are trying to figure out what to do and hedge fundsvaleant. >> let's get to bob pisanpisani. >> and six ham on the gdp, take a look at china. we had a mixed session over there. i think maybe not a lot of surprise. but shanghai and shenzhen went different directions. put up the china economy numbers. gdp 6.9%, slowest since 2009. but here is what is interesting.
industrial output and retail sales number. 5.7 on industrial output. that was a little worse than expected. and september retail sales 10.9, that was a little better than expected. we had 10.8 in august. so this is really the tale of two chinas. two different things doing on. the traditional drivers of growth, industrial production for example, are slowing. but retail sales which is the consumer is increasing. so in a way, the chinese government is going through with their promise to move the consumer along a little bit stronger, more strongly, and it's showing up in the numbers. it's also showing up 6.9 handle in the sectors here. oil is weak towards the lower end of of the trading range. centering stocks are down. materials also noticeably weak. and financial industrials are also lagging a bit. you can see the effect on material stocks here. the mining and ore companies.
all the usual suspects are to the down side. you mention the hasbro. boys division was strong, but i keep hitting on this theme the effect of the strong dollar. so hasbro on the international division, they get 50% of their revenues outside of the united states reported down 6%. that's with the effect of currency. take out foreign exchange, they were up 14%. that's $126 million difference. they went out of their way to note the dollar difference between currency and the reported number that included effects of currency. enormous influences on these companies that also impacted their bottom line. you see hasbro trading slightly to the down side. let me talk about hewlett-packard. because we'll get the split into two separate companies here. so there will be two separate companies, hewlett-packard enterprise, that will be the software and services business,
and huewlett-packard inc., personal hardware business. record date is october 21. so everyone is on holder on october 21 will get one share hp enterprise or one share of you hugh let that th hewlett. you see this crowd, we're trying to get this open, the wynn issued stock. we'll let you know as soon as that happens. and finally, we were surprised to hear about the match -- the fact that the filing occurred. there had been out there for a while, but everyone was anticipating that some of the bigger names would be held off. but they did announce match, ok cupid and tinder. seeking to raise almost $100 million. 2 that is just a place holder. we didn't have the terms. as soon as we get more, i'll let
you know. right now the dow down 67 points. back to you. yeah, that match s1 an interesting read. a lot more details to come there. did want to get to an overbid this morning in the technology arena, in the chip area that we haven't mentioned yet. and we'll mention now. micro semi perhaps not a company that you've heard that often of, about $3.5 million chip company. comes over the top to try to break up a deal in which pmc sierra has agreed to be acquired by sky works. remember that deal? micro semi offering 8.75 a share in cash and a shaer the deal wot $11.50 a share before the opening of trading and it's having quite an impact on shares of pmc sierra now trading above the implied price. docto why? with the expectation that you would potentially have a bidding
war here. no word yet from pmc sierra in terms of what it will do. the key of course is how micro semi stock price performs. will it hold, will it get worse. that will certainly dictate the value. and i would argue tmomentum tha they may be able to create in terms of trying to get something done with the board of pmc sierra of course if they can in fact break that existing deal with sky works. certainly it is a premium over the existing sky works deal. a lot of sinner synergy misterm revenues and costs. $75 million in the first quarter. immediate accretion, as well. now, we're no stranger to chip deals. wherein tell ather intel and al, we're talking about $100 billion in m and a so far in this
industry. >> sky works went down pretty heavily after that deal. >> it was not a stock deal, so did not impact the overall value. >> i like the deal because sky works was very centered on handheld. verycentered on apple. these have been kind of hostage and hostage and hostage and xpi to a certain extent. so it would be kind of ironic sky works lost it and started going higher. >> yeah, exactly. by the way, they do potentially have a timing advantage. they say they don't need chinese antitrust approval and that takes a long time. they say this deal could close if they did an exchange offer as soon as december. so we'll see how they perform here as they combat against the far larger sky works with this existing deal.
all right. let's get to rick santelli from the cme group in chicago. >> good morning. home bases 2%, earnings are upon us. we have some important data throughout the month especially around the time of our debate, we'll be be looking at ggdp. all of these issues of course continue to really give us a two way trade with two perspectives. we know global growth is on the light side and 6.9 growth in china was expected. but nonetheless still the lowest growth rate since you 2009. the other dynamic of course continues to be the notion that we can't seem to bring the market back below 2%, so these traders gladly try to continue to push. if you look at ten year from april, you can see that this pattern really looks as though it should be easy, slam dunk, on push it below 2. but it isn't.
and if you look at tens minus twos, we see that the spread really is going nowhere fast, but one two year you should be aware of is the minus 26 basis point of a two year in the european sector and if you look at that spread, historically over 20 year chart, failed to get above 100, of course that's due to the minus nature of ours and theirs and of course our 60 plus basis points. intra day on the dollar entex didn't show you most of the action that has been moving out of chicago into new york. these capital flows for some reason over the weekend money flying out of chicago. and if you look at a year to date, it doesn't show up. david faber, i'm sure i was the first guy to e-mail you nothing is more shocking than calling for a sweep except for not getting to hold the broom. >> yeah. well, i will say, rick, the game
wasn't a minute over when you e-mailed immediately and said what is your favorite charity. i have to say, game one i thought we had a real shot. yesterday was a bit shocking that we beat up on arrieta the way we did. >> i tell you what, i underestimated your pitching. but it didn't mean that all of us in chicago aren't going to take a couple of prozacs and tip to root for the cubs because we will. but i think my days of jinxing them through betting is indeed over. >> that's too bad. i'd love you to keep it going. >> i figured you might. that's why i always get invited to everybody's poker games. >> back to chicago we go on tuesday. thanks, rick. when we come back, a venture capitalist and tech investor roger mcnamee, we'll get his take on the struggling ipo market. your screen is showing the nasdaq up 16. but it's actually down almost 10. we apologize to that. we'll get that fixed.
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welcome back. i'm eamon javers in washington. joe biden is liking to make his decision within the next 48 hours or so. it's not clear which direction the vice president is leaning, but we might have an end to this long wait for the vice president to decide whether or not he's getting in to the presidential race here within thedays or so. and here in washington, a tremendous amount of political waiting because you have democrats waiting for vice president joe biden and on the republican side, we have a whole lot of waiting on a speaker of the house decision from paul ryan who may or may not decide to get into that race this week according to various reporting that is going on, as well. so a whole lot of breath holding
here if washingtn washington, d. >> thank you for that. it's time for stop trading. >> a lot of talk about walmart. the chatter i'm getting is that walmart will use this investment cycle saying we won't to this earnings in order to build out an amazonlike system. even an amazon webster adviserv like system. you know what, they may have bought some time. i'm not calling a system. you know what, they may have bought some time. i'm not calling a bottom, but when he's saying, maybe he can out amazon. no way you can get the revenue growth otherwise. >> amazon market cap 41% higher than walmart's now. >> there is pride involved. and i just don't think -- i know mr. mcmillan, heavily criticized last week, did come straightforward and talk about it, but don't rule him out.
but it's -- it's two years from now. >> and what is on mad tonight? >> six flags which is one of my favorite stocks, big gasoline play. good yield there. >> we'll see you tonight. "mad money." go eagles. we'll get home builder sentiment after a break. can a business have a mind? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?
good monday morning. welcome back to "squawk on the street." markets bouncing off of an early decline as we're watching china gdp, morgan stanley numbers and all-star list of earnings in the coming week. in the meantime, let's get to diana olick in washington breaking news on home builder sentiment. >> home builder sentiment in october up 3 points to 64 on the national association of home builder monthly sentiment index. we haven't seen that level in about a decade. sales expectations rose 7 points to 75. current sales conditions up 3 points to 70.
and buyer traffic was flat at 47, still the only index component mired in the negative territory. builders do cite softness in some markets due to availability of lots and labor, but we did see a surge of confidence out west. the rest of the country saw a one point gain. this as analysts or some analysts at lesion are quite bullish on the home builders stocks. compass point has raised its ratings on two builders. they cite that they are looking at the hope trade, that is during november to march when investors buy into the home builder stocks at the lows hoping that the spring season will turn out to be gang busters. 10 they do expe so they expect to see stocks rise and they are again hoping that they will see the stocks surge ahead of a possibly better spring season in 2016.
back to you. overall pretty good sign.ga. third quarter results fall you go sort of expectations, profit following 42%. mary thompson digging into the numbers. >> this is the last of the big banks to report and morgan stanley's results were hurt by weak trading and pick up in legal expenses. earnings of 42 cents a share excluding adjustments for change in the value of the firm's debt were 20 cents shy of estimates. revenue missed by over a billion dollars. on the call analysts were focused on the weak performance in fixed currencies and commodities trading. the firm has shrunk the unit and cut back on risk weighted assets. morgan stanley blamed the poor performance on an unusual trading environment which had an
outside negative impact on the larger businesses. and even though it was the worst quarter since the financial crisis, james gorman brushed off suggestions that it would lead to further cuts in the business. >> we by no means are complac t complacent, but fixed income business is essential to everything else that we do with the wealth management and so on. so it's a continuing focus for us, but i'm not taking everything from one single quarter. >> all three of morgan's main businesses saw declines in revenue including wealth management which of course gorman has grown to provide stability to the firm's results. investment revenue hurt by significant under performance in the asian private equity fund. carl, back to you. >> for more on the earnings, ralph silva sbr analyst.
good morning. for all we've heard about gorman's transition into wealth management, why isn't it working? >> i used to like morgan stanley. i don't anymore. i think this is undefensible. we've been hearing for months from the senior management that held deal with volatility. clearly we misunderstood. these numbers are not working out. they have a decline in fixed income. that is understandable. but 40% decline is undefendable. we also had a downturn this underwriting. fine. but again 40%. and lastly, the asian markets are hurting? this is not a surprise. they should have mitigated against that and they haven't. and i'm really disappointed. >> they're not operating in a vacuum. trading revenue down 15, exactly what goldman posted. >> yes. in the trading area, that's not a big deal. we just have huge volatility because we have a market correction. so as long as you can answer the phone, you can make money. it's the other areas that they're focusing on that concerns me especially in the
adviser area. they should be doing a lot more dominating that environment. and i don't think they're doing that right now. >> boy, you are harsh today, ralph. just wondering if you're as harsh on some of the other pig banks. and you're not alone on morgan stanley. i think down 13%, 14% this year. one of the shout outs from the cfo in terms of bright spots came on m and a, pipeline looks good, that drove a healthy part of their business. how you would you be playing this among the big banks? would you buy morgan stanley or someone else? >> to be honest, i'm actually pretty confident about morgan stanley. not because of their management. that's the problem. but i think their underlying worker bees as it were, they're really good in the m and m area especially. i'm just concerned about the senior management. they should be doing operational methodology.
they should be reducing head count and they're not doing that. they have great people but weak management. >> to that point, they did on the call say a number of things that seemed to indicate they may be focused on head count. is that your expectation? >> that's what i'm hoping. especially on a global perspective. if you look at the global banking leaders, they have all reduced their head counts and relied on technology. they have to stay up with the rest of them and right now they're not doing that and i hope they do. >> so it sounds like you're essentially wiping the slate clean of them. would you argue that it is a lost cause? >> i don't think they're a lost cause. let's be clear. i think that they have a good solid group of people who are working especially in the m and a losing people, but m and a doing well. i think long term they will dominate within this market. they have the capacity to do
that. they have the relationships to do that. i just think management has to get out of the way and let the worker bees get their job done. >> surely the center of this discussion is about trading. for the first six months of the year, apparently 40% of the revenue came from trading. so we knew that was where so much of the bank was focused on. when you see the trading itself, it's down 42%. is that simply because markets are volatile? if the markets went their way in the fourth quarter, could that qu equally be reversed? >> it could be. but my concern isn't the fact that they're going along with the trend. it's that they're beating the trends on the negative side. they shouldn't have 40% reduction. >> can you explain, is that r proprietary training or more fundamental? >> it's across the board trading. their trading environments are
more reliant on the sales than most of the other environments and they have to improve their sales capacity and that they're lagging behind slightly. also on a global perspective. and that's a big concern i have for morgan stanley. they need to start dominating on a global perspective. and asia should not come as a surprise and it did and i'm concerned about the other parts of the world. >> i think the credit market was not kind to them, as well. along with some of the other big banks. you mentioned head count, layoffs. who is doing the best job in terms of expense management? >> i don't think they're the american banks. the ones doing the best jobs in all kind of management are the european universal banks. hsbcs of the world are doing the solid head count. but in the u.s. market, actually i think the retail operation, bank of america, citibanks are the ones doing a better job. >> i have to interject here. surely if you look at the europeans, they are effectively
crumbling away. lean a many are abandoning the franchises. >> but they're not abandoning the investment bank operations and that's where the massive amount is going into. they're becoming much better at business organizations, business to business organizations. and i think that's where the american organizations have to better focus on. right now they're fairly decent retail operations. >> ralph, definitely working the stock take. thanks for your time. talking about morgan stanley. and then there is valeant lifting its full year outlook. meg has all the details. >> valeant really not enough to lift its stock. let's check out the numbers. eps, company turning in $2.74 versus estimates of $2.70 ready per share. revenue just about in line
versus estimates. and raising it estimates -- or its forecast for the fourth quarter and full year. now, mike pearson addressing a lot of questions on the conference call today about drug pricing concerns and patient access. he says the company is likely to pursue fewer if any transactions focused on quote/unquote misproper priced products. he said given the current environment, they have built in more modest drug price increases to their forecast. he said this is hitting pharmaceutical companies across the board. if you take a look at valeant's performance, down almost 30%. pearson saying they are thinking a lot about a potential buy back saying i don't think there is any acquisition right now that would earn the return of buying pack valeant shares. so still not enough to lift those shares today, though. they're down about 4%. back to you. >> and very interesting to hear the executives address all of
this price pressure. thank you very much, meg terrell. up next, markets shrugging off china's data. what is ahead for the rest of the week? it is a busy one when it comes to earnings. here at td ameritrade, they love innovating. and apparently, they also love stickers. what's up with these things, victor? we decided to give ourselves stickers for each feature we release. we read about 10,000 suggestions a week to create features that as traders we'd want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. who reads all those? he does. for all the confidence you need. td ameritrade. you got this.
china somewhat eased this morning. closest quarter expansion for six years, but still above the 6.8% estimated by economists. for more, we're joined by michael hanson at bank of america merrill lynch and kevin karen market strantegist. kevin, this isn't show a serious deterioration and i think that's the kind of stud thattitude tha are approaching it with. >> yeah, it's not a serious deterioration, but the composite picture for us, this has been a relatively soft year. in fact we have to go back to 2006, 2007, 2008 to find a weaker year. so we'll just be surprised if we get to the imf expected growth rate of over 3%. we don't think the global economy is growing that fast and consequently are a bit cautious on portfolios at this point.
>> let's come back to that in a moment. michael, you're the economist here. how much confidence do you have in the figures? on the one happened the drag for lower manufacturing and exports of course being eased by services which apparently in china accelerated at 8.4% despite the fact that stock market was melting down at the time. >> yeah, i think the direction of data is right. who knows for sure exactly where the levels are. there is a lot of skepticism that the numbers may be in fact lower. but i do think it probably is correct to say that the dynamic in china right now is one where you've got this structural shift going on away from export driven manufacturing driven growth towards more consumer driven growth. so it's hard to say if the numbers are that good or that high. but i do think the direction is right and i do think it's the case that china is not melting down. they're slowing down. >> michael, let's come back to where we are on the equity markets and you suggesting
global fwlogrowth is being challenged. with a quarter of the s&p reporting, how are you concerned about corporate pricing being weak, jpmorgan suggesting the gap between corporate pricing a wages has now turned negative foot first time in six years? how concerned you are -- no, no michael, forgive me. how concerned are you about profitability? >> so i do think that you're seeing some signs of some weakness there. i think that the profits overshot for quite a while early in the cycle when you ahead very weak growth and corporate sector in much better relative position. i'm not overly concerned that we've seen the end, but we'll see throw doslowdown going forw. if this is the trend, i think it will help further recovery going forward. >> it does feel, kevin, that it's an individual stock story when it comes to earnings with the slew of earnings coming out
next week if you look at nike or pepsi versus some of the ones that vice president behaven't b. where do you see pockets of strength? >> i think health care is where the growth is best. places like energy are a very good value. but the dynamic in the earnings story is still not there same with basic materials. so i think that ultimately the more defensive kind of names within the health care space, some of the consumer names that have been knocked around because of this concern about the strong demand, i think that is kind of a one time thing. so looking at consumer staples and health care i think would be good places to look. and throw technology in the mix, as well. in so health care the best performing s&p 500 sector. a lot of people point to consumer discretionary, but simon mentioned the idea of wage pressure starting to hit profitability. do you think that's a factor in consumer discretionary? >> i think it is if you have --
if you think about the movement towards a higher minimum wage, all those kind of things, you've got tightening going on in the labor market. we're not at a point where i can say the labor market is tight, but it is moving in that direction. so at some point, you had expect to see some better wages there. and that's a good thing ultimately because if it kept going the other way where wages -- we can't sdidn't see a group, that would be more tidir. >> so what do you think we'll do to christmas? >> i don't he sooch. if the data trends were moving more positively, we'd be more optimist optimistic. but we're positithinking a year now, maybe 2200 on s&p, 6% kind of move between now and next year. but we don't have any large expe expectation. primarily because the data is so weak. and we're stretched in terms of
the valuations. >> we'll leave it there. have a good week, guys. coming up, it's been a rocky year for companies trying to go public. number of postponed ipos for this year is already at a three year high and we still have more than two months left. this as we wait of course for ferrari to price i think tuesday night trading/wednesday. more on that after the break. yo? i got a job! i'll be programming at ge. oh i got a job too, at zazzies. (friends gasp) the app where you put fruit hats on animals? i love that! guys, i'll be writing code that helps machines communicate. (interrupting) i just zazzied you.
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including cloud and hosting services - all backed by an industry leading broadband network and people committed to helping you grow your business. you get a company that's more than just the sum of it's parts. centurylink. your link to what's next. there is been 67 ipos withdrawn or postponed so far this year, that is a three year high. bob pisani is on the floor with more. >> interesting ones coming and a few postponed recently.
you have to be careful when using the terminology withdrawn or postponed because it means different things. let me show you some ipos recently withdrawn and some that have been postponed. withdrawn is a very formal statement. it means the company went to the s.e.c. and said we're withdrawing our offer. it's called an rw, where for withdrawal. there have been a few high profile ones. and then there are companies that just postponed like albe alberts albertson's. they're not withdrawn, but not going public. terms have been filed, they will try to set prices. but it's not been withdrawn. and then there are ones out there like neiman marcus just delayed. they didn't announce any terms. we've been waiting for them do that. they're holding back on doing that. so a little bit careful on the terminology. i looked at renaissance, they keep track of the formally withdrawn, they're 48 this year and that would be looks like they could challenge the highest
level since about 2012 which is consistent wheith what you hear there. 150 ipos, well below what we had last year, 285. we'll probably have a spate in t fourth quarter if things get abo better. market conditions have been difficult particularly second half of the year. that's the number one issue. if you don't have the market going up, it's hard to get new ipos through the door. the ear thiother thing is the e commodity showdown. no energy etfs have gotten through this year including master limited partnerships that were big deals last year. so there are the two reasons. i do want to point out, the ipo etf, 60 recent ipos, since labor day, we've gotten better pricing. so they have had to cut the prices for those that had come and the trading has been better for those that have come. you see that move off of the
bottom in the end of september. that ipo etf up about 8% so far this month versus only 5% for the s&p 500. so the bottom line is cut the prices and market trades a little bit better. a price for virtually everything. >> and a silver lining to all the uncertainty. thank you very much. so amid all of this ipo mystery, ferrari is expected to price this week, but some are asking when it comes to the valuation is it a luxury brand or auto company he? robert frank has more. >> good morning. when ferrari goes public, its shares will be expensive, scarce and highly sought after. the question is whether it should be valued as a car company or luxury brand. their chairman saying it's more
like prada than bmw. rights now investors seem to agree. ferrari's shares expected to trade at about the top end of the $48 to 4 $52 a share chang. around 14 times operating profit. in its latest s.e.c. filing this morning, ferrari describes itself as a luxury lifestyle brand that happens to make cars, but also plans to expand through clothing, electronics, watch, luggage and even theme parks. skeptics point out that making cars is a little more complicated and capital intensive than handbags and cars have much smaller margins. margins of around 14% are among the highest in the car industry, but still lower than the 30 plus percent margins that yyou get te hermes and other companies. profit up over 60% from last year, so clearly the prancing
good morning. here is your cnbc news update. florida police are searching for the gunman behind this weekend's deadly shooting at a zombie themed event. one person killed, five injured. authorities are not commenting on any possible motive. secretary of state john kerry is calling on israelis and palestinians to he said a recent outbreak of senseless violence near the west bank. the secretary's comments come days before he is scheduled to meet with leaders in both regions. old man winter is making an early appearance. look at that, yikes. 6 inches of lake-effect snow blanketing parts of new york state while much of the northeast is being hit with below normal temperatures. and oprah winfrey is getting into the weight loss business. the billionaire business woman acquiring a 10% stake in weight watchers and also joining their board. the new sending the stock soaring in monday's trading. and that is your cnbc news
update. >> that stock needed it. >> absolutely. >> the oprah touch. thank you. well, looking at overall markets, relatively calm on this monday morning. nasdaq slightly positive, dow down about 40 points. let's bring in art cashin with ubs. we'll talk about black monday in a bit, but first, i look at copper, "some pressure on commodities. kind of a mixed reaction overnight. what did you make of it? >> i think people had difficulty sorting through it. came out at 6.9, they were looking for 6.8, but it didn't really break todown that their economy is truly slowing. at worse 5.5.all good numbers. >> and then the followup question, what does it mean in terms of stimulus. is this a world focused on
quantitative easing, monetary policy, even fiscal stimulus. from china, japan, to the united states. >> no question. and everybody thinks that it may mean another round of qe, almost everywhere, perhaps even in the united states. but i'm not so sure. i think that with stanley fisher on board, they will be loath to try another qe. i've long been a believer that the next move they would make would probably be another qe. but i think he will try to be the restraining order. for all the big talk about whatever it takes, he had to be dragged yelling and screaming in to qe. so i think it will be slowly. >> so when janet yellen first brought up china as a specific target of the fed more or less, it shocked everybody. you can argue that what she was waiting for was to be assured that there wasn't going to be a rapid deterioration in china or the markets in response to that. you could argue what we're
getting today, therefore, removes china potentially as a concern for them. more likely to raise rates although of course now they're focused more this economy. could you have that argument, could you not? >> i think that you could say that it less bens the pressure, not removes it. many of the commodities did not respond negatively, so i think that's what they were looking for, that kind of domino effect. chinese markets, european markets, it brings cheaper oil, it brings cheaper copper. and it bodes perhaps for deflationary pressure. >> i wonder in terms of the signal for the equity market, this kind of valley we've seen over the last few weeks has been pretty strong. is the next direction going to come from earnings, from the fed, from the data? what are you watching? >> i think a little bit of the fed and earnings. we have several fed speakers, we have a couple today. williams will be giving an interview around 2 ouk. interview not a speech, so that's a higher risk that he
could say something that might be market moving. and the earnings have been okay, but the rereal falloff has beenn the revenue line once again. they're finding out it's touch tough every and toutougher and . >> in terms of the clues from the credit market, i did read commentary that there are cautionary signals. is that something to be concerned about? >> it is and the high yield market is deteriorating a bit more. although historically having been around for some time, you can see a divergence between high yield and equities that last longer than many others would expect. >> let me ask the question about black monday since i remember it. i was reading your notes that you put out recalling how that
day happened. and the fact that you were before the market traded that morning, i think it was a monday, actually one of the traders came up to you and said we salute you. you went in knowing that it was going to be tough. >> yes, we did it. markets were already down 10%. bizarre as it seems now, friday before, dow was down 108 points. the greatest point dron in tp s its inception. so we knew the markets were vulnerable. i had run up -- i was running the floor for paine webber. i ran up to the luncheon club to get a last cup of coffee after checking the systems and the chairman of the exchange was seated at a table off to the side. and all morning long, waiting for that cup of coffee, i must have seen 20 or 30 people run up to him to whisper in his ear. >> what is the takeaway from that, what do you tell
grandchildren about that day, the lessons perhaps for investing or for stock markets? >> i think it's a lesson that things can go to extremes. we saw some of that in 2008 and 2009. my line that i often repeat when you can't sell what you want to sell, you sell whatever you can. and that's what happened then. it was an extreme. we had a firm that spoke to institutions and invented what they call portfolio insurance. bizarrely meant because they thought the futures were so liquid that you see weakness, sell into it rather than buy into it. and you see strength, buy into it. and that's what set up what happened. and you had parallel markets with nonparallel rules. and that's what really took you over the edge. >> also interesting to go back and read some of the reasons and causes what triggered the selloff, falling dollar, prospect of higher interest
rates, conflict between the u.s. and iran. and some of the parallels are a little bit -- >> it's like opening a box and saying i know where all those were all over again. >> art, always good to get you here onset sharing some of the memories. art cashin from ubs. >> thank you. still ahead, one of the pioneers of the smart home is out with several new products, one of which is compatible with apple's home kit. both the ceo and co-founder of august will join us later.
with with a whole host of big stocks reporting earnings this week, which one could see the biggest bounce? our traders give their picks on trading nation.cnbc.com. more stra"squawk on the street" coming up. kid: do you pay him? dad: of course. kid: how much? dad: i don't know exactly. kid: what if you're not happy?
week. but energy a standout. >> energy leading all s&p 500 sectors to the down side, down 1.5% so far in this early trade. this as oil continues to fall over 2% at least from the west texas intermediate side of things on concerns of course over chinese demand given the gdp number. maybe they use less oil. energy still the worst performing sector so far this year. back to you. watching the energy trade, we're also watching bonds of course with the ten year hovering around the 2% level. let's go to rick santelli with the santelli exchange. >> good morning. i'd like to welcome my special guest brian wesbury. thanks for taking the time. the monday after a very tough chicago sports weekend.
>> yeah. wildcats lost, bears lost and cubs lost. oh, my goodness. >> it wasn't a great weekend. sharp objects were taken out of high residence. when i look at the fact that i was trading gold at the chicago mercantile if exchange from the late '70s to the early '80s, i remember futures roughly around 175 bucks. it is you look at the chart at 2011, can you tell me why everything we've been through since the '80s could not propel inflation new high? >> it could always. the federal reserve is what created the big boom in oil prices and gold price in the 70s and in to the early 80s. what is fascinating, banks
aren't using that money, they're sticking it aside in excess revefshr reserv reserves. and i don't see gold taking that old high out. i don't see it happening. i think the fed is getting close to raising rates. even if they did qe again, it wouldn't boost the m2 measure of money and that's what you need to grow to rpropel gold higher. >> whenever you get involved in the pricing issue, milton friedman said inflation and will forever be a monetary phenomenon. but i don't think he expected some of the policies we've seen globally. so let's stop looking at gold as a fundamental indicator. why do you think investors especially last several months are so are ethat hnamored with ?
i understand the dollar is weak, but that doesn't explain it all. >> i've always thought gold has a couple components. you have to have devaluation of the dollar. too many dollars chasing too few -- >> what about the angry crowd? >> yeah. that's one factor. the other factor i think is this global turmoil. geopolitical pressures. unrest in the middle east, iran launching launching a ballistic missile. what would gold be worth? so you always have to put a little bit of -- >> what about the fed, brian. is there a component in there that as markets lose confidence that central plans will have a happy ending, sddoes that make e allure of gold better? >> absolutely.
gold is the last thing you take out of your house after you run for the hills. if we lose control by trying literally trying to manage everything which is what our government is doing today, we've seen that go out of kilter in how many different countries over hundreds and hundreds of years? and it could happen in the united states. i don't think it will. and that's why i still believe gold is overvalued today. i think it's going to come back down. but you're right, there is always that probability and if it grows from 1% fto 2% to 3%, that adds to the price of gold. >> always in the hunt. listen, thanks for taking the time. maybe gold isn't quite out of time. sim simon, sarah, it's your time. >> thank yyou very much. check out shares of weight
watchers. up 82% after new that's oprah is taking a 10% stake. she's joined the program and will document her experience. joining us now on the news line is taking a 10% stake. she's joined the program and will document her experience. joining us now on the news lines taking a 10% stake. she's joined the program and will document her experience. joining us now on the news line taking a 10% stake. she's joined the program and will document her experience. joining us now on the news line, profess professor, thanks for joining us. what may be are more valuable here is that she's given the company the right to use her name, image, likeness and endorsement. talk about the value of that. >> certainly oprah is probably the most successful commerce sha xwlers shal endorser that we've seen. and what we see, she has her oprah favorite's club and being selected to that could change the future of the company. some companies weren't prepared for how successful she was going to make them and their websites
crashed and they couldn't meet orders while others solidified themselves as a permanent brand in american supermarkets because of the inclusion of them on this oprahs favorites list. >> it would be great if you could discuss a few more examples because especially for a company like weight watchers which the stock was down 70% so far this year, i know you're not an expert on weight watchers, but all sorts of existential threats like the fit bits, my fitness pal that you don't have to pay for to monitor what you're eating and how much weight you're losing. and now the stock is soaring on oprah. so has she ever been part of an actual company turnaround? and you think she has the potential to do that. >> she's never been part of a turnaround. ands importantly, her past endorsements, there has been no idea of her having a financial stake. the point of the campaign was for her to pick projects that she liked and used. there will be a question as to how people react to the paid
endorsement. oprah's book club in which she really could change the fortunes of a wide variety of books. she got americans to have the putdown on the two grafton levels. >> and she bought $40 million of share or promised to and she's instantly this morning made a profit on that of $32 million. so the effect take she can have is quite clear. some people will say, well, look, she doesn't have the daily platform syndicated show, but not having that allows her potentially to have financial interests in this way. and there is not a late night clat show or syndicated daytime show that would not have her on if she's offering herself by the way could you mention my stake in weight watchers. >> i agree. the question is what is the pow
are of oprah today versus the early 2000s. she doesn't have a show, she does do specials on the o network and the own cable network she runs, had some struggles to start but is now turning around and doing better. even in this current media environment quite an ability to influence opinion. in a world of fragmented celebrity where we have sort of lots of very small celebrities on every individual little channel, she does still have a presence among consumer zbllgs obviously can she make stars. she can boost consumer products. can she pick stocks though? is there any track record of her investments? >> not publicly, she's never had to disclose her investment. she's obviously a fantastically wealthy person but that's not from her investment acumen, that's her labor effort, harpo and the own network. i don't think there's evidence of that. the closest we have of evidence on stocks is when she spoke out
about mad cow in the 90sed catt. was involved in a lawsuit in texas for agriculture products there. estimate that it was the equivalent of 50% -- >> got it, thank you, very useful information. craig garthwaite. weight watcher shares up over 40%. >> we'll hear from rand paul on why he thinks the fed should be audited. squawk on street will be right back.
republican presidential candidate rand paul thinks congress should be able to take a closer look, a much closer look, at the feds books. our own john harwood is live in washington and has been talking to the man himself. >> rand paul has been calling for auditing the fed for some time but hadn't gotten a lot of headway with that argument. one of the reasons is donald trump. rand paul says, about donald trump's rise, it's not only frustrating, it's dangerous.
>> what is the meaning in your view of the rise of trump this year? what does that tell us about the republican party? >> well, i think it shows you that we do live in a celebrity culture. there's somewhat i would call self-reinforcing news cycle. everywhere you look, all day long, he's on tv. i don't think having a reality tv star is best for the country. >> do you see him as capable of serving as president? >> i worry very much. i think i worry about someone who is so self-absorbed with their own importance and their own ability to figure out problems that it's sort of, like, give me power. if you give me power, i'm so smart and i'm so rich that i will fix all of america's problems. >> of course, donald trump is not rand pull's only problem. he's pushing a 15% flat tax that the republican congress is not moving. he says that's evidence the incumbents need to go. >> my plan's not going through
this congress. republicans don't even support a flat tax up there. >> isn't that a signal that it's simply not realistic to talk about? >> no, it's a single al we need swap out the people up here. these people up here are for nothing. >> you need a whole new group? >> i think turnover is a good idea. i think what's happened is people get beaten down by the system. >> of course, we'll hear from rand paul, the other republican candidates on stage at our cnbc debate next week in boulder. by the time we take that stage, we may know whether joe biden's going to get into the race. we heard a decision may be coming within the next 48 hours. as you know, i always believed he would not enter the race but we may about to find out what he thinks. >> should be an interesting 48 hours. thank you very much, john harwood. let's send it over to john to see what's coming up on "squawk alley." >> we'll dig into the ipo market.
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good morning. it is 8:00 a.m. at amazon headquarters in seattle, 11:00 a.m. on wall street and "squawk alley" is live. welcome to "squawk alley" for a monday. roger, good morning to you. kay la is live at one market in san francisco. john ford's with me here at post nine with the dow down about 28 points.